HUD

Reverse Loan Applicants and Financial Assessment

If you read the previous part of the article in an earlier post, then you are aware of the pending changes that will take place on March 2, 2015 for anyone applying for the FHA Reverse mortgage.   The point of the assessments is to determine whether or not the potential applicant will have the capacity to continue to pay their property taxes and keep their home insured.

At this time, it is not clear what type of documentation will be required from the applicant to verify income and residual cash flow, but more than likely it will be bank statements, copes of Social Security and or pension income.

Reverse mortgages are beginning to sound like a traditional loan, as the documentation will be very similar.

HUD Releases Reverse Mortgage Financial Assessment to Take Effect March 2015

Posted By Elizabeth Ecker On November 10, 2014 @ 1:39 pm In News,Reverse Mortgage

The mortgagee letter also specifies documents [3] that must be collected and submitted for all borrowers. The documentation has been updated to include “Financial Assessment Documentation” that includes, but is not limited to, credit history documentation, income verification, asset verification, property charge verification, residual income analysis, documentation of extenuating circumstances or compensating factors, and calculations for life expectancy set asides and residual income shortfall set asides.

According to HUD, the lender must evaluate the borrower’s “willingness and capacity to timely meet his or her financial obligations and to comply with the mortgage requirements.

“Where the mortgagor has not demonstrated the willingness to meet his or her financial obligations as stated above and no extenuating circumstances can be documented, the mortgagee must require a fully funded Life Expectancy Set-Aside.”

The assessment refers to previous mortgagee letters that drafted the financial assessment but takes the place of those mortgagee letters with some changes.

The changes are likely to present tailwinds, rather than headwinds, one executive told attendees of the National Reverse Mortgage Lenders Association national conference in Miami on Monday.

Written by Elizabeth Ecker

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Financial Assessment Coming for Reverse Loans

HUD issued their announcement in regards to when the Financial Assessments for Reverse loan applicants will go into effect.   We have been waiting throughout the year for the commencement date and anticipating this next level of protection for the borrowers who are applying for a Reverse mortgage.

Here is a copy of an article that discusses the announcement and what we in the Reverse loan industry can expect and what type of documentation the potential borrower will be tasked to provide as part of the loan application.

HUD Releases Reverse Mortgage Financial Assessment to Take Effect March 2015

Posted By Elizabeth Ecker On November 10, 2014 @ 1:39 pm In News,Reverse Mortgage | No Comments

The Department of Housing and Urban Development has issued a financial assessment for reverse mortgage borrowers that will take effect for all case numbers issued on or after March 2, 2015.

The financial assessment [1] is detailed by HUD through Mortgagee Letter 2014-22 [2] published Monday. For borrowers who do not demonstrate their willingness to meet their loan obligations, a fully-funded life expectancy set-aside will be required.

“The mortgagee must evaluate the mortgagor’s willingness and capacity to timely meet his or her financial obligations and to comply with the mortgage requirements,” HUD writes in defining the purpose of the financial assessment. “In conducting this financial assessment, mortgagees must take into consideration that some mortgagors seek a HECM due to financial difficulties, which may be reflected in the mortgagor’s credit report and/or property charge payment history. The mortgagee must also consider to what extent the proceeds of the HECM could provide a solution to any such financial difficulties.”

I will share the remainder of this article in a following post.

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